Following the recent lawsuit against Tether and Bitfinex, it has been revealed that Tether has been using some of its cash reserves to purchase bitcoin. This was revealed in a recent transcript of the court proceedings.
“Prior to the April 24th order … Tether actually did invest in instruments beyond cash and cash equivalents, including bitcoin, they bought bitcoin.”
Tether and Bitfinex are hitting the headlines again, with the above extract from the court proceedings showing that Tether has been investing in Bitcoin, as well as other “investment instruments” beyond cash or cash equivalents. The transcript goes on to highlight some other thoughts from the Judge about this and what the aim of this “Stablecoin” actually is. When talking about Tether, New York Supreme Court Judge Joel M. Cohen stated that “Tether sounded to me like sort of the calm in the storm of Cryptocurrency trading. And so if Tether is backed by bitcoin, how is that consistent? If some of your assets are in a volatile currency that Tether is supposed to somehow modulate, that seems like it’s playing into what they are saying.” Tether countered this by saying it was only a small amount.
This lawsuit regarding the frozen $850 million looks set to continue for some time, and has the potential to reveal more and more information about the inner workings of these two interlinked companies.
Cryptocurrency has come a long way in the last 12 months, and there are now several alternative Stablecoins who are far more transparent about their operations. Whether these types of revelations about Tether and Bitfinex have any significant or lasting effects on the markets like we have seen in previous years is worth careful consideration.